FRANCHISE DISCLOSURE DOCUMENT HAMPTON INNS ...

27, 2003. At the close of evidence on June 5, 2003, the court granted the Hilton Parties’ motions for a
directed verdict as to the Hixon Parties’ claims for fraud, fraudulent inducement, fraudulent
concealment, and civil conspiracy. The parties then entered into a settlement under which the Hilton
Parties paid $1,800,000 to Hixon in exchange for dismissal of the negligent misrepresentation claim
and full mutual releases of all other known and unknown claims.
Inn on Robinwood, Inc., Alamance Inns, Inc. v. Promus Hotels, Inc., Hilton Hotels Corporation, United
States District Court for the Middle District of North Carolina, Civil Action No. 1:03CV00885.
On September 17, 2003, two Hampton Inn franchisees filed suit against Promus and HHC (now Hilton
Worldwide) seeking declaratory relief and preliminary and permanent injunctive relief and alleging
claims for breach of contract, tortious interference with contractual relations, unjust enrichment, and
unfair and deceptive trade practices. The action followed a previous state court lawsuit brought by
Promus against the same franchisees, Promus Hotels, Inc. v. Inn on Robinwood, Inc. and Alamance
Inns, Inc. (Tennessee Chancery Court, 30th Judicial District at Memphis, No. 110186-2 T.D.), to
recover unpaid fees. The actions concerned the franchisees’ attempt to reject various system wide
Hampton Inn programs instituted by Promus, despite full participation in those programs by all other
franchisees in the Hampton Inn system. Believing that the franchisees’ actions were in violation of the
license agreements and were potentially undermining the integrity and uniformity of the Hampton Inn
system and thereby harming its other franchisees, Promus concluded that it was necessary to
immediately remove the franchisees from the system. Promus agreed in this unique circumstance to
pay the franchisees $575,000 for early termination of both license agreements, dismissal with
prejudice of both actions, and the franchisees’ prompt exit from the Hampton Inn system including deidentification
of the properties.
Pillion Properties, Inc. v. Promus Hotels, Inc. and Hilton Hotels Corporation, Dallas County, Texas
District Court Docket Number 03-5484, United States District Court for the Northern District of Texas,
Civil Action Number 3-03-CV-1317N, and United States Bankruptcy Court for the Northern District of
Texas, Fort Worth Division, Case Number 03-45909-DML-11.
On June 2, 2003, the plaintiff, a Hampton Inn franchisee, filed its Complaint seeking, among other
things, injunctive relief enjoining the defendant Promus Hotels, Inc. from moving forward with a
planned termination of the license agreement relating to the plaintiff’s failure to pay franchise fees.
The complaint also asserted claims against the defendants for breach of contract, promissory
estoppel, tortuous interference, unfair competition, conspiracy, fraud and fraudulent concealment. The
Dallas County District Court entered an ex parte Order restraining Promus from terminating the
license agreement for 5 days and established an injunction hearing date. Prior to the injunction
hearing date, the Defendants removed the action to the United States District Court for the Northern
District of Texas. In the federal court, the plaintiff sought to renew its request for injunctive relief. The
defendants filed their Answer denying all of the plaintiff’s allegations. The hearing for a preliminary
injunction was set to be heard on June 26, 2003. Hours before the hearing, the plaintiff filed its
Chapter 11 bankruptcy petition in the United States Bankruptcy Court for the Northern District of
Texas. On September 11, 2003, the defendants filed a Motion for Relief from the Automatic Stay
seeking permission to move forward with termination of the license agreement. On December 17,
2003, the Bankruptcy Court entered an Order Modifying the Automatic Stay permitting Promus to
terminate the license agreement. On December 31, 2003, the license agreement was terminated and
the hotel was removed from the system.
{000011-999987 00174938.DOC; 2}
March 31, 2011 Hampton
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